| March 04, 2024 | | | | | Jeff Bergstrom
Editor
John Lothian News | |
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| | | | Observations & Insight | | |
Futures Discovery: Physical Delivery VS Cash Settlement
JohnLothianNews.com
Today, we're delving into the fundamental aspect of futures trading-the Settlement Showdown: Physical Delivery versus Cash Settlement. In the dynamic world of futures trading, how contracts are settled is a game-changer, influencing strategies and risks alike. Join me as we explore the two primary methods that define this landscape: Physical Delivery and Cash Settlement.
Watch the video »
| | | | | | Lead Stories | | | Low VIX caused by ETFs, not options-hungry day traders, says the BIS; Report helps explain why volatility muted during uncertain periods
Jamie Chisholm - MarketWatch
Persistently low levels for the CBOE VIX index are likely the result of investors piling into yield-enhanced exchange traded funds, according to the umbrella institution for central banks.
The Bank for International Settlements, based in Basel, Switzerland, says in its quarterly report published Monday that a low VIX of late is unlikely to have been caused by retail traders' predilection for buying short-term options and was instead caused by the popularity of structured products which offer higher returns to investors by selling options.
Options give investors the right, but not the obligation, to buy via a call or sell via a put, an underlying asset at a particular price within a certain time period.
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Options Show Bitcoin Traders Are Betting on $70,000 and Beyond; Demand for out of money calls rises after mild weekend; Open interest is concentrated in even higher strike prices
David Pan - Bloomberg
Traders are setting their sights beyond Bitcoin's 2021 record price even before it has been broken, with options showing growing expectations for a run to as high as $80,000 by the end of March.
The open interest, or the number of outstanding contracts, for short-dated call options that expire on March 29 with strike prices of $70,000, $75,000 and $80,000 has climbed in the last 24 hours, data from Deribit and Amberdata show. Bitcoin rose as much as 5.7% to $66,460 on Monday, bringing it within striking distance of its all-time high of $68,991 set in November 2021.
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The Casino Crowd Is Back Across Markets With Soft Echoes of 2021; Speculative stocks, crypto rise as retail traders embrace risk; Bearish investors get punished as most-shorted companies rally
Denitsa Tsekova and Isabelle Lee - Bloomberg
Three years since speculative fever engulfed the US investment landscape, thrill seeking is back in vogue - even before Jerome Powell & Co. take their foot off the monetary brake. Bitcoin's resurrection above $60,000 is once again front-page news as meme coins rally anew. Gambling spirits go way beyond crypto, though. Demand for bullish stock options, another mainstay of the 2021 investing era, is booming. Pandemic superstars like Carvana Co. and Beyond Meat Inc. have surged - burning bears along the way.
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Hedge Funds Can Pose Risks to Big Wall Street Brokers, BIS Warns
Caitlin McCabe - The Wall Street Journal
Three years after the implosion of Archegos Capital Management battered several Wall Street names, the Switzerland-based Bank for International Settlements is still concerned about problems at hedge funds spilling over into the banking sector. The BIS, a consortium of central banks, highlighted potential vulnerabilities for prime brokers. These are the units within big banks that provide financing for trading clients-primarily hedge funds and family offices such as Archegos.
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| | | | | | Exchanges | | | OCC February 2024 Monthly Volume Data
OCC
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CME Group Reports February ADV of 29.6 Million Contracts; Second-highest February on record; All-time monthly record for interest rate complex, with ADV of 17.2 million contracts
Record U.S. Treasury futures and options ADV of 10.9 million contracts; Record February options ADV of 6.4 million contracts
CME Group
CME Group, the world's leading derivatives marketplace, today reported its February 2024 market statistics, including an average daily volume (ADV) of 29.6 million contracts, an increase of 5% year-over-year and the second highest ADV on record for the month. The company's interest rate ADV reached a new all-time record, driven by trading of U.S. Treasury contracts. ADV also increased by double-digits in energy and agricultural products. Market statistics are available in greater detail at https://cmegroupinc.gcs-web.com/monthly-volume.
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Cash market trading volumes in February 2024
Deutsche Borse
Deutsche Borse's cash markets generated a turnover of EUR108.42 billion in February (previous year: EUR113.31 billion / previous month: EUR105.01 billion). EUR104.41 billion were attributable to Xetra (previous year: EUR110.38 billion / previous month EUR101.35 billion), bringing the average daily Xetra trading volume to EUR4.97 billion (previous year: EUR5.52 billion / previous month: EUR4.61 billion). Trading volumes on Börse Frankfurt were EUR4.01 billion (previous year: EUR2.93 billion / previous month: EUR3.66 billion).
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| | | | | | Technology | | | Trading Technologies' TT platform wins Best Listed Derivatives Trading Solution at TradingTech Insight Europe Awards 2024
Trading Technologies
Trading Technologies International, Inc. (TT), a global capital markets technology platform provider, has won the award for Best Listed Derivatives Trading Solution for its TT platform at the TradingTech Insight Awards Europe 2024. The awards were announced at the TradingTech Summit London on Thursday. TradingTech Insight is a publication of A-Team Group. A-Team editors worked in collaboration with an Advisory Board to select the shortlist in each award category, and members of the capital markets community voted to determine the winners. The honor is the third A-Team Group recognition for the TT platform in the past three years. The platform was voted Best Solution for Futures Trading in the TradingTech Insight USA Awards 2023 and Best Sell-Side Execution Management System (EMS) in the USA awards in 2022.
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***** I also recently heard congratulations are due to Joe Smith for winning the Joe Smith Awards.~JJL
| | | | | | Moves | | | Catherine Lam Garcia is starting a new position at Cboe Global Markets as head of NA | European Execution Consulting and NA Business Development, she shared on LinkedIn.
Caitlin Tucker is starting a new position as vice president of communications at Cboe Global Markets, promoted from senior director of communications, she shared on LinkedIn.
| | | | | | Strategy | | | Basics of Rolling to Hedge Delta
tastylive (Video)
In this video, the hosts discuss the volatility in various markets, including Bitcoin and tech stocks. They mention how Bitcoin and related products like Mara, Coinbase, and MSTR are experiencing significant price increases. They also note that while the market indices are relatively flat, there are big movers in individual stocks such as MicroStrategy and NVIDIA. The hosts emphasize the importance of understanding the high volatility in these products when considering trading strategies. They discuss the risks of trading options in high volatility environments and the potential impact of delta and volatility risk. The hosts also mention the recent run in gold and silver prices, as well as the underperformance of certain stocks like Apple and Google. They address viewer questions about specific trading strategies, such as iron condors, zebra spreads, and covered calls. Throughout the video, they provide insights and suggestions on handling various market conditions and adjusting positions to manage risk. They conclude with a discussion on upcoming earnings releases and market expectations. Overall, the hosts offer a comprehensive market update and provide insights for traders and investors.
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Gold and Silver Volatility at Decade Lows
Simon White, Bloomberg macro strategist via Markets Insider
Inflation is back on the radar this week after yesterday's release of PCE in the US. It showed a modest fall from the prior month in the headline print (but under the surface the picture was more worrying), lending credence to the bigger picture signal of inflation pressures building again. Emblematic of how unpriced assets are for this likelihood, volatility in gold and silver and other metals is near decade lows.
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Two Big Upside Risks To Watch
Benzinga via Markets Insider
Stocks made new record highs, with the S&P 500 reaching a closing high of 5,137.08 and an intraday high of 5,140.33 on Friday. For the week, the S&P gained 1%. The index is now up 7.7% year to date and up 43.6% from its October 12, 2022 closing low of 3,577.03.
In the markets and the economy, things rarely unfold exactly as expected. Often they're better than expected. Sometimes they're far worse.
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Beige Book
Cboe (Video)
In #Vol411, Joel Hawthorne @louiswinthrop lets us know that Friday's option trading volume was ~20% above recent average, some of the most active options trading so far today are led by $TSLA and $NVDA and more.
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| | | | | | Miscellaneous | | | The Great Recession's unsung hero; Brooksley Born saw the financial crisis coming. Wall Street's boys club ignored her.
Josie Cox - Business Insider
When Lehman Brothers filed for bankruptcy in the fall of 2008, jolting an already ailing global economy into near-freefall, the whole world was in shock. But one woman could legitimately have claimed she saw it coming.
The story of Brooksley Born is not only the tale of a remarkable regulator whose Cassandra-like warnings â if heeded â could've prevented the great financial crisis from exploding into raging, ruinous enormity. It's also, more broadly, an account of how systemic bias and prejudice created the conditions for a dangerous breed of groupthink to thrive with ultimately disastrous consequences. Understanding what went wrong back then can teach us an important lesson about managing risks in the future: Every voice in the room is worth hearing, even if â and perhaps especially if â the message is inconvenient.
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| | | | John Lothian News (JLN) is the news division of John J. Lothian & Company, Inc. (JJLCO). The online media and financial services firm is staffed by derivatives industry, journalism and technology professionals. | | | | | | | John Lothian News Editorial Staff: | | | John Lothian
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